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McKinsey Endorses Digitizing Procurement and Payables to Optimize Public Sector Savings

By Orville Bailey, CEO, EqualLevel.

Every year the state, local and education (SLED) procurement market spends a staggering $1.5 trillion dollars annually on goods and services. In 2018, after analyzing more than 700 procurement efforts, management consulting firm McKinsey & Company concluded that at 28 percent, the public sector has the greatest potential for savings of any other sector (How smarter purchasing can improve public-sector performance).  In round dollars this adds up to the public sector potentially being able to save $400 billion through optimizing procurement. 

According to McKinsey, online tools can reduce administrative burdens. And there’s no question just the streamlining of operations alone could save hundreds of millions in non value-added time. Procure-to-pay automation improves the efficiency and effectiveness of the procurement and payables processes by digitizing manual tasks and leveraging transparency to improve decision-making. The public sector has long been plagued by the inefficiencies and costs associated with manual requisitioning, ordering, invoice reconciliation, and payment processing.

Innovating with a best-of-breed eProcurement and eInvoicing platform optimizes execution across all processes associated with the rec-order-pay transaction. A well-designed solution helps procurement and finance to streamline operations. The benefits of eProcurement and eInvoicing are numerous:

Efficiency: Automating leads to faster cycle times and improved productivity. The elimination of paper and manual steps frees up time for employees to focus on more critical initiatives.

Cost Savings: With all approved vendors housed in one centralized location, best value products can be easily identified.

Compliance: By automating the three-bid process and showing only contracted vendors, an eProcurement marketplace helps organizations comply with state and federal regulations.

Transparency: Robust reporting capabilities help ensure purchases conform to established policies. Real-time visibility into purchasing activities discourages maverick spending and provides leadership with valuable insights.

There is no doubt “the use of modern technology can take a big chunk off of public-sector bills” (Now is the Time for Procurement to Lead Value Capture) and the time to automate procure-to-pay is now. By improving efficiencies, the SLED market has the opportunity to generate savings that can help to offset the impact of COVID-19 and other budget pressures they are facing. 

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Time is Money: Learn How to Save Both with an eProcurement Marketplace

If there’s one thing the COVID-19 pandemic has taught us in the business world, it’s that so much of what was traditionally done manually can more quickly and easily be accomplished online. This includes the manual, paper-based procurement process which has been plagued with inefficiencies in requisitioning, ordering, invoice reconciliation, and payment processing. Outdated, inflexible, and costly purchasing systems also restrict the ability to conduct broad-based procurement with the supply community.

What if there was an “easy” button for the procurement process? Over the last two decades, eCommerce has exploded in the consumer world with companies like Amazon making buying almost anything as easy as 1-2-3. By digitizing the procurement process, the shopping experience for businesses can be just as simple and can lead to increased savings and operational efficiency.

EqualLevel’s eProcurement marketplace allows organizations to quickly implement a cloud-based, multi-vendor, procure-to-pay marketplace that ensures compliance and can be accessed anywhere, at any time. Increasing transparency, efficiency, and compliance, the marketplace enables organizations to conduct business in the office or remotely, and it provides greater access into an approved, fully digital supply network.

The marketplace seamlessly integrates with existing enterprise resource planning (ERP) systems so that all approved suppliers/vendors and all goods and services managed by procurement are located in one easy-to-use, easy-to-administer system. It spans the entire procurement lifecycle, from punch-out commerce solutions to shopping for goods or services, approval workflow, catalog and contract pricing, purchase order automation,and receipt-invoice matching.

Organizations that have implemented an eProcurement marketplace have quickly recognized the many benefits of digitizing the procurement process. To list a few:

Efficiency: By automating a significant portion of the procurement process, an eProcurement marketplace leads to faster cycle times and improved productivity. The elimination of paper and manual steps also frees up time for employees to focus on more value-added activities.

Cost Saving: Cost-saving with an eProcurement system comes not only from ordering through preferred vendors but also from increased spend visibility. The EqualLevel Savings Advisor (ELSA) analyzes quotes to ensure the best value and uses machine learning to become smarter with every purchase. Utilizing a real-time, federated search across punchout sites, similar to Travelocity or Orbitz, data is collected from distributed sources and artificial intelligence (AI) technology uses this data to identify savings opportunities.

Compliance: Implementing a one-stop, multi-vendor punchout marketplace of all approved suppliers and contracts ensures compliance with state and federal regulations. The system automatically creates a three-bid process to determine product price, select the supplier (among approved vendors), and create the requisition or shopping cart for approval.

Transparency: eProcurement also makes it easier to conduct and analyze reports on procurement systems in order to ensure that the procedures conform to established policies. Real-time visibility into what supplies employees are purchasing and from which vendors provides valuable business insight and eliminates maverick spending.

Innovating an outdated procurement process with an online eProcurement marketplace provides a single, seamless platform to facilitate the shop-order-pay transaction. It provides employees with a more streamlined and efficient experience so they can optimize every dollar spent and every moment doing so.

When it comes to procurement, time is money. Neither time nor money should be wasted. Isn’t it time for your organization to hit the easy button and jump in?

Learn more about the EqualLevel eProcurement marketplace at https://equallevel.com/marketplace.

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